So teams should just not vet candidates? An in person interview is also going to be 2-4 hours, plus travel time. Should we stop doing those, too? How exactly do you suggest teams screen candidates?

They are asking the interviewee to complete the same task as done by an existing staff member, and compare the results, how is that "free labour"?

I'm not sure where I stand on this sort of thing to be honest, my only experience of anything similar was a pre-interview task to implement a simple 10 entry LRU cache, and after getting the job I was told the only reason it was there was to weed out time wasters with next to zero skill being sent by the recruitment company.

Any industry where hiring candidates with bad fit is extremely expensive will have a long interviewing process. For the candidate there is not much difference between spending 2-4 hours at home at a time of their choosing and 2-4 hours in a first of the N rounds of on-site interviews. Except they will have to expense transport and work around their job schedule.